A real defense is a justification for a maker or drawer not to honor a negotiable instrument

Negotiable instrument

A negotiable instrument is a document guaranteeing the payment of a specific amount of money, either on demand, or at a set time. According to the Section 13 of the Negotiable Instruments Act, 1881 in India, a negotiable instrument means a promissory note, bill of exchange or cheque payable either...

 even if it has been transferred to a holder in due course

Holder in due course

The Holder in Due Course doctrine is a rule in commercial law that protects a purchaser of debt. The doctrine insulates the purchaser of debt, or other obligation to pay, against charges that either party to the original transaction might have had against the other.-Example:Suppose A promised to...

 (or "HDC") because it makes the instrument “void” according to Uniform Commercial Code

Uniform Commercial Code

The Uniform Commercial Code , first published in 1952, is one of a number of uniform acts that have been promulgated in conjunction with efforts to harmonize the law of sales and other commercial transactions in all 50 states within the United States of America.The goal of harmonizing state law is...

 §3-305 comment 1, thus it can’t be "cut off" by the transfer to an HDC. Contrast this with personal defenses (such as failure of consideration

Consideration

Consideration is the central concept in the common law of contracts and is required, in most cases, for a contract to be enforceable. Consideration is the price one pays for another's promise. It can take a number of forms: money, property, a promise, the doing of an act, or even refraining from...

), which cannot protect the maker against the claims by an HDC.

Ten types of real defenses depending upon state law

1. Fraud inducing obligor to sign instrument without a reasonable opportunity to learn of its fraudulent character or essential terms (also known as “(fraud in the factum”); this depends upon consideration of “all relevant factors”;

2. forgery of a necessary signature;

3. adjudicated insanity which renders the instrument void;

4. material alteration of the instrument, such as the amount;

5. infancy which renders the instrument voidable or void;

6. illegality which renders the instrument void;

7. duress at the time of making the instrument;

8. discharge of obligor in insolvency proceedings, or any discharge known to the HDC;

9. a suretyship defense, such as the holder knew an indorser was signing as a surety or accommodation party;

10. statute of limitation (generally 3 years after dishonor of a draft or 6 years after demand or other due date on a note).